Starwood Capital CEO: Workers should be top priority for federal aid

Starwood Capital Group chairman and CEO Barry Sternlicht
levied criticism against the U.S. government’s proposed trillion-dollar
stimulus package in a television interview last week with “Bloomberg Markets:
The Close,” calling plans for a payroll tax cut “stupid” and asking lawmakers
to focus on helping “the 20 million people in the service industries who are
going to lose their jobs.”

“The money must go first to the individuals who can’t afford
to eat,” said Sternlicht. “You don’t need a payroll tax cut — that assumes you
had a job. That’s not the issue. The issue is the people who are unemployed or
who will become unemployed. The government needs to focus on packages to the
people who are most distressed.”

When asked about financial aid packages currently under
consideration for various travel sectors, including a proposed $50 billion
bailout for the airline industry, Sternlicht questioned whether such moves are

“The industries themselves, the companies, if the banks
behave themselves, won’t be under too much strain if we’re talking 90 or 120
days [of shutdown]. And maybe they should turn the market off for two weeks and
let us get through this. We’re facing World War III for 90 days. It’s not World
War III for five years, or World War III for 10 years.”

Sternlicht went on to add that the banks “aren’t in
tremendous duress” and that Starwood Capital is “pretty comfortable” with its
credit exposure. He said that the company currently has “ample access” to
liquidity, with almost $700 million in cash. 

“The hotel companies will come back,” said Sternlicht. “We
just have to bridge a situation that nobody caused. This is a plague that will
be short-lived. It will pass.”

Sternlicht’s comments come as the American Hotel and Lodging
Association (AHLA) and other hospitality leaders lobby aggressively for federal
financial aid.
The trade group has said that most of those funds would be directed toward
covering wages and retaining and rehiring of employees. It also has said that 61%
of hotel operations are small businesses.

The AHLA and Oxford Economics have estimated that 4 million
U.S. hotel jobs have either been eliminated or are on the verge of being lost
within the next few weeks.

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